Pricing Strategy: Part 2

This is part 1 of a 5 part series on Pricing Strategy – Part 2.

Welcome to the second week of pricing strategy! Last week, we discussed the inputs you should consider when coming up with a price, particularly the value of your product to your customers. We then used the price elasticity of demand to figure out how customers will react to any changes you make in that price.

However, you probably don’t have a single customer persona that is using your product. In order to maximize revenue across all of these personas, you’ll want to offer a different price for each customer segment. This is called tiered pricing, and will be the topic the next two days.

Another way companies often try to segment customers via price is by offering discounts or promotions. I’ll wrap up our discussion of pricing strategy by talking about the pros and cons of these pricing initiatives.

Like last week, we will spend one day on theory and then a day looking at a theoretical example using my hypothetical company, Doug’s Desserts, which sells its baked goods online and has a subscription service that it sells.